According to the latest data from Core Logic, Adelaide’s housing market continues to perform well with 14.9% growth for the 12-month period to 31st August, 2024. At the end of August 2024, Adelaide’s median dwelling value reached $790,800, surpassing Melbourne’s at $776,044; a city traditionally perceived as more prestigious and economically vibrant that Adelaide. This shift in property market dynamics reflects broader trends across Australia, where mid-sized cities like Adelaide and Perth are gaining traction due to their relative affordability and attractive lifestyle. Brisbane’s median dwelling value edged ahead of Melbourne in late 2023.
The 1.4% growth in Adelaide’s median dwelling value over the month of August is testament to the city’s resilience and growing appeal. While Adelaide might not have a bridge, an MCG, an opera house or a harbour, it does have fabulous wineries, protected beaches, well-priced fresh produce, little air pollution, the stunning Adelaide Oval and affordable private schooling for those who desire it. Unlike Sydney and Melbourne, where property prices have been historically high for the long term, Adelaide offers a more affordable alternative without compromising on quality of life. This affordability has become a critical factor, especially in the current economic climate, where rising interest rates and living costs are placing additional pressure on homebuyers. Assisting value growth in other cities and in regional areas is the trend toward working remotely, meaning that some occupations can be serviced 100% remotely or with an infrequent face to face catch up to maintain connection.
Adelaide’s property market is not just growing; it’s evolving. The city has seen substantial demand for properties in the lower quartile, which represents the most affordable 25% of dwellings. This trend indicates that many buyers are prioritising housing affordability, leading to increased competition in this segment of the market. The strong performance of Adelaide’s unit market further underscores this shift, as buyers are increasingly drawn to more affordable housing options that still offer proximity to urban amenities.
The broader Australian housing market, however, is showing signs of cooling, with national growth rates slowing compared to the previous year. This deceleration is particularly evident in larger cities, where the combination of high prices, interest rates, and cost of living pressures have started to take a toll on demand. In contrast, Adelaide’s market continues to defy these trends.
The economic stability of Adelaide is a significant factor contributing to its real estate market’s strength. The city has benefited from a diversified economy, with sectors such as defence, energy and mining, space and technology, as well as international education playing key roles in sustaining growth. This economic diversity has helped insulate Adelaide from some of the volatility seen in other parts of the country, making it an attractive destination for both investors and homebuyers.
However, the rapid growth in Adelaide’s housing market also raises concerns about sustainability. As property prices continue to rise, there is an increasing risk that the market could overheat, particularly if interest rates continue to climb. The value affordability that has been a key driver of Adelaide’s market could be eroded if prices increase too quickly, potentially leading to a slowdown in demand. Conversely, the mum and dad investor market might see some exits with those investors becoming challenged by the recent changes to tenancy laws which favour tenants and can make self-managing properties difficult. Potentially this might see a freeing up of stock at the lower end.
Another potential challenge for Adelaide is the impact of rising living costs on homebuyers. As inflation continues, households are facing higher expenses for essentials such as food, utilities, and transportation. This financial pressure could reduce the amount of disposable income available for mortgage repayments, leading to increased financial stress for some homeowners. In this context, maintaining lifestyle affordability will be crucial for sustaining the momentum in Adelaide’s housing market. Higher value roles are typically located on the eastern seaboard. According to Forbes Advisor, data published in July 2024 sees the Sydney average annual salary come in at $82,000, Melbourne $77,000 Brisbane $75,000 while Adelaide is a sizable $10,000 shy of Sydney at $72,000.
Despite these challenges, Adelaide remains a standout performer in Australia’s property market. The city’s combination of accessibility, economic stability, and quality of lifestyle continues to attract a diverse range of buyers, from first-time homebuyers to investors. The fact that Adelaide has now surpassed Melbourne in terms of median dwelling value is a significant milestone, highlighting the city’s growing importance in the national real estate landscape.
Looking ahead, the outlook for Adelaide’s housing market is one off cautious optimism. While the market’s recent growth is impressive, maintaining this momentum will require careful management of affordability and economic factors. Policymakers and industry stakeholders will need to work together to ensure that Adelaide remains an attractive option for homebuyers, even as the broader national market faces increasing headwinds.
